People who cash in their pensions under the new government reforms will be protected from paying more for their care, the minister in charge of the scheme has said.

In his Budget last month, George Osborne announced changes making it easier for people to withdraw money from their pension pot. The Prime Minister admitted that people who take large sums this way could end up paying more for social care in old age.

However, ministers are now working on legislation to ensure that any money they draw down does not count towards the means test for social care.

Steve Webb, the pensions minister, said: “We will make sure that there are rules in place by next April so that people can benefit from the new pensions freedoms in full.

“People who work hard all their lives and put money by for their retirement should have the maximum possible enjoyment of their own money.”